Beer Taxation and Pubs

Baroness Anderson of Stoke-on-Trent Excerpts

Thursday 28th March 2019 Commons Chamber

[Ruth Smeeth (Stoke-on-Trent North) (Lab)]

I congratulate my friend, the chairman of the APPG on beer, the hon. Member for Dudley South (Mike Wood). It is an honour to serve as his deputy and as the Labour lead in the House on the issue of beer.

I must declare an interest—not one in the register—in that I am the hon. Member for the Titanic brewery, the best small brewer in the United Kingdom.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

I’ve got the pubs.

[Ruth Smeeth]

I think I am going to be heckled throughout by my hon. Friend and neighbour.

Titanic has benefited hugely from small brewer’s relief, which I will touch on in a moment. First, I would like to put on record my thanks to Keith and Dave Bott not only for the support that I receive from them, but for the investment they have made in my community. They have ensured that small brewers have had a voice in this place, and others, for many years.

It is a pleasure to talk about a B-word that has nothing to do with Brexit. I think we can all agree that we have spent enough time on that for a little while. Instead, I would like to talk about the value of pubs to our society.

While the sector supports more than 1 million jobs in the country, and we heard various statistics from the hon. Member for Dudley South about it, we need to touch on the other things that the pub sector delivers, such as the impact on loneliness—especially providing somewhere for older gentlemen to go—and on our communities.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

Does the hon. Member recognise the importance of linking community pubs with craft breweries, such as Loch Lomond and Lennox breweries in my constituency, which reduces social isolation and consumption of alcohol at home?

[Ruth Smeeth]

There is a huge opportunity for us to debate the benefits of off-licence versus on-licence, the support that people get when they enter a pub and the responsibilities of the landlord. That is especially the case when we talk about loneliness.

[Bob Stewart (Beckenham) (Con)]

I was stirred to action by the hon. Lady, my good friend, using the words “older gentlemen”—I qualify, but I am not lonely. The way to keep the pubs in our communities alive is for people to visit them. If we get more people going to the pubs, they will live longer. That is very important—and, by the way, that includes me.

[Ruth Smeeth]

I thank my friend for his intervention. I think a pint of Steerage from the Titanic brewery will definitely help him live longer.

Pubs bring everyone together in the community. Whether it is fundraising for local charities, increasing awareness of illnesses or just everyone coming together on a Sunday evening, pubs are at the heart of our communities when other institutions are falling away.

[Louise Haigh (Sheffield, Heeley) (Lab)]

I congratulate my hon. Friend on making an excellent speech about the importance of the pubs at the heart of our communities. We are losing so many community pubs because of the terrible imbalance in our business rates regime. I am sure she will come on to it, but does she agree that this disparity—pubs pay 2.8% of the entire business rates bill but account for 0.5% of turnover, an overpayment of £500 million a year—desperately needs addressing?

[Ruth Smeeth]

I will touch on taxation in a moment.

I want to talk about the role of pubs in British culture and society, because they are a core part of who we are. People enjoy coming to the UK for tourism—an issue that we need to discuss even more as we head towards Brexit—and there is nothing more English or British than holding a pint. Tonight at the Sentinel business awards, which I cannot attend because of the debates in the House, everyone will toast their awards with a pint of local beer, because it is part of our community and our culture.

[Mary Robinson]

Will the hon. Lady give way?

[Ruth Smeeth]

I am afraid that I have run out of time for interventions.

As my hon. Friend the Member for Sheffield, Heeley (Louise Haigh) said, there are some stark figures about the impact of taxation on the sector that we need to acknowledge. Amazon UK paid £4.5 million in corporation tax last year. Black Sheep brewery, chaired by the wonderful Andy Slee, a Stoke-on-Trent constituent, paid £8 million in beer duty. Amazon UK has a turnover of £1.98 billion. Black Sheep brewery has a turnover of £19 million. Minister, there is an issue here. In 2016, eBay UK paid £1.6 million in corporation tax. Titanic brewery paid 25% of its turnover to HMRC—£2 million.

On the disparity in business rates, following the rate revaluation last year, Titanic brewery pubs’ rateable value went up by 20% across Staffordshire. The Amazon warehouse in Stoke-on-Trent fell by 10% in rateable value. There is a disparity, and it is simply not fair for online and offline businesses. Breweries and pubs cannot move off the high street, nor would we want them to.

Small business rate relief has been touched on, but I am going to run out of time. All I can ask the Minister at this point is to look at the requests made by the Society of Independent Brewers about the impact of the changes. We are at a cliff edge, and unless this is smoothed out, investment to enable smaller brewers to reach the next level will stop. I reiterate my invitation to the Minister earlier this year to come and have a pint with me at Titanic brewery at his earliest convenience.

--- Later in debate ---

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I congratulate the hon. Member for Dudley South (Mike Wood), my near neighbour, on securing this debate. He mentioned Baynhams beer, of which I am a regular consumer and supporter, and Ma Pardoes pub, where I am a regular visitor. In fairness to all the other Black Country beers and drinking places, I must say that it is a fantastic area for anyone who loves their beer. The sheer range of craft and real ales there is phenomenal.

I particularly welcome the debate because it is framed in the context of the taxation regime for pubs. We need a change in that regime, but that alone will not protect our pubs and their heritage unless it is allied with a change in the supervisory and regulatory relationship between pub tenants and pub-owning businesses.

Let me touch first on the tax regime, although Members have covered most of this. There is obviously a case for looking at alcohol duties. The fact that high-alcohol beers and ciders are taxed at hugely different rates is in itself a reason for looking at them. The fact that high-alcohol spirits are taxed at a lower rate is another reason for looking at them. Ultimately, it is the job of the Treasury to have a comprehensive review of these duties. That should be designed first to promote social drinking, secondly to sustain pubs and lastly to sustain Exchequer revenues.

[Ruth Smeeth]

My hon. Friend has touched on the fact that there are differential duties. Does he agree that it is ludicrous that there is still, in effect, a subsidy for cider producers whose products contain high levels of alcohol, when that is not the case for beer? There needs to be a level playing field across the sector.

[Mr Bailey]

I agree with my hon. Friend. Given the increased consumption of cider and the increased tax revenues from it, I would have thought there was a case for looking at the relative taxation levels of the two drinks.

Business rates have been mentioned. I will not go over the details, but we have a ludicrous situation whereby someone who invests in their business and increases their turnover often gets a huge increase in their business rates as well. One example given to me involved somebody who took over a pub that had traded at £200,000. He raised that to £700,000 but then found that his business rates had gone from £8,400 to £37,000. He did get that reduced to £24,000, but the mere fact that he had such a big increase and that it was then revised would seem to demonstrate that the process for evaluating business rates is deeply flawed. I recognise the Government’s attempts to do something about that, but we really need a comprehensive review of business rates so that they are geared in such a way as to promote and reward investment rather than penalise it.